People have been rapidly migrating from physical money to digital ways to pay, and if you want to launch a product that could make digital payments much easier for users, think about creating a P2P (peer-to-peer) app. This type of app solves such user’s issues as the need to repay after a dinner with friends, pay to a handyman for some household work, or return a small amount of borrowed money – the type of situation when hitting the nearest ATM or writing out checks is not an option. 

To date, over 70 million people in the US prefer to stay cashless and use P2P apps to transfer money in day-to-day life, while mobile transaction volume has hit the bar of $500 billion. So, the sector is booming, and if you’ve chosen to move forward by building a fintech app, turn your attention to the P2P sector. 

Surf has broad expertise in building fintech apps, including P2P ones, and in this article, we will outline the main pillars of making a reliable and demanded product for the global fintech market. 

What is a P2P payment app? 

Before narrowing down to how to build a P2P payment app, let’s figure out what P2P payment products stand for. 

Generally, a P2P payment system plays the role of a middleman, helping a person to transfer funds from their bank account to another person’s bank account via an app. P2P apps facilitate the easy, secure, and fast peer-to-peer transfer of funds by just one tap on a user’s smartphone – a convenience that underpinned their increasing popularity worldwide. 

P2P payment business model types are the following: 

• Standalone P2P services. 

These P2P vendors have their own mechanism facilitating money transfer. Typically, vendors provide users with a wallet, where they can store money before offloading it to a bank account or sending it to peers. This non-bank model is especially popular in some developing countries, where people have limited access to banking.

Examples: PayPal, Square Cash, Alipay, M-Pesa. 

• Bank-centric services. 

Such a P2P payment business model involves a bank as one of the transaction parties. Bank-centric services, in turn, can be divided into two more categories: own mobile applications of banks – for example, Surf has recently developed the mobile multi banking app for Zenit group enabling peer-to-peer payments for its users – and P2P payments apps that transfer funds via credit unions or partner banks. 

Examples: Dwolla, Zelle, PopMoney. 

• Social media-centric services. 

Social media companies figured we’re more likely to send frequent payments to people we have regular contact with. In this case, the payment function is embedded into a messaging app, so users don’t need to pass through strong authentication to complete a transaction. 

Examples: Facebook Messenger, Snapchat, WeChat. 

• Services of mobile/OS manufacturers. 

These services enable fund transfers between users of a product ecosystem. The ability to pay here is enabled rather with a device feature than an app. This P2P payment business model works best for the developed countries where payment infrastructure is developed enough and is daily used by many people. 

Examples: Apple Pay, Samsung Pay, Google Pay. 

What are social+ payment apps and what’s behind their rise? 

Apart from different types of business models behind P2P apps, there’s another important factor contributing to P2P product success – social engagement or the use of the social+ concept. Overall, social+ companies are disrupting niche markets by giving consumers multiple benefits at once: such products serve a concrete purpose and simultaneously meet users’ need for belonging to a community. In other words, social engagement is an inextricable component of a social+ product: if you removed the social element, the product would cease to make sense. 

This business logic creates network effects that competitors can’t replicate just by copying other app’s features. Social+ products help users to gain new knowledge, find motivation, garner status, form networks and feel like they’re part of something bigger. 

Examples of social+ fintech products:

• Public (investing platform providing an access to UGC content by a million+ strong community of investors, creators, and analysts)
• Commonstock (allows users to follow one another, create posts about their investments, engage in community forums, and chat one-on-one)
• StokFella (social-first lending product)

Examples of social+ products in other niches:

• Gaming (Fortnite)
• Fitness (Strava, Peloton)
• Commerce (Pinduoduo)
• Audio (Clubhouse)

And what about incorporating the social+ concept in a P2P payment app development? The best example of a successful social+ P2P payment product is Venmo, which transformed simple peer-to-peer transactions into joyful social experiences. 

Venmo was launched in 2009, and in just 5 months became prominent enough to be purchased for $26.2 million by Braintree, a PayPal company. Payment apps like Venmo combine the idea of a virtual wallet and a social network. Users can make instant and secure transactions with friends or companies located in the user’s vicinity once they link their accounts with a bank account or a credit card. It is possible to make a search for and add a friend, as well as view all your transactions accompanied with short messages and emojis in a continuous feed, which is not just an entertaining feature, but the one that brings customers back to the app and increases customer retention rate.

Venmo makes social interaction about money issues fun and less awkward: if your friend forgets to pay what they owe you, you can Venmo request that individual for the money without seeming stingy for asking for $4 for a beer or snack. Among US millennials (the app is most popular in the US) the word Venmo has transformed into a verb – the phrase “I’ll Venmo you” meaning “I’ll pay you back” has become commonly used. 

Benefits of social+ apps

Below are some advantages of P2P payment apps like Venmo:  

• Growth. 

When the social aspect of a product is integral to its function, users generate the app growth by themselves, inviting their friends and family to join the community. And then it goes by inertia: people are fired up by exciting interactions within the app, talk about it and increase product awareness. 

• Retention.

The key to the success of any product is building a strong and loyal community around its brand. Otherwise, users leave you for a competitor offering the same service at more attractive conditions. 

The best thing about the social+ concept is that embedding social interaction within a P2P app allows you to own that conversation and build a community around your brand. 

• User-generated content (UGC).

UGC drives user engagement and fosters connections among users. That means the company can harness the creativity and popularity of its users and doesn’t have to expend as many resources creating content users find valuable. 

• Personalized customer experience. 

These are built using insights from users’ input in the community. Harnessing personalized customer experience can bring exciting business results without huge marketing expenses. 

Main features of social+ payment app

If you are looking to create a social+ payment app like Venmo, the steps will be more or less the same as in the case with any app, enabling you to make peer-to-peer transactions, except you will need to integrate some social interaction features. 

And now let’s look at the core features to make the whole process of P2P payment app development clearer: 

• Make payments. 

The ability to make real-time payments without any fees is a primary feature of any P2P payment app. Developing a peer-to-peer app, make sure that the money transaction mechanism is secure and reliable. 

• Share payments. 

While creating a payment app like Venmo, it is essential to add the feature of payment sharing to transfer funds to any known person.

• Split bills.

This feature gives your users an opportunity to split bills with their friends from inside the app itself. 

• Money request.

Users can request money from other app users who owe them. This functionality needs in-app messaging and notification features to notify the other users of the request. 

• Data encryption. 

Data security always matters in fintech products. It’s essential to create an ecosystem where the users’ sensitive information is robustly encrypted.

• Linking bank account/credit/debit cards.

To make the payment transfer process smooth, allow users to link their bank accounts and cards in the app. This makes it easier for the users to make payments straight from their bank accounts without relying on other online payment wallets.

• Money transfer.

Provide users with the flexibility to transfer money to any bank account within the app and then from a bank account to their app wallet.

• Synchronization with a contact list/Facebook friend list.

While creating a P2P payment app, include this feature into your mobile app development roadmap, as it significantly improves user experience by allowing users to transfer money by simply selecting the contacts and sending the message.

• Track payments.

For the sake of federal financial regulations and user experience, it is crucial to provide the option to keep track of the transaction history. 

• Multi-tier authentication system.

Fingerprint authentication or pin-code is necessary to avoid any data leaks.

• Account settings. 

Allow users to set their account settings and give an option to select a preferred payment method and update information as per their choice.

Cost of developing a social+ P2P payment app

The cost of developing a P2P payment app like Venmo depends on the different stages, features, and app development structure. So let’s figure out some indicative costs of the core features (assuming that the developer’s rate is $50 per hour):

Bottom line

Let’s summarize the main ideas of the article: 

• P2P payment apps enable fast and secure money transfers between individuals or businesses and clients. Such apps have different business models: standalone services, bank-centric, social media-centric, services of mobile or OS manufacturers.
• The most successful P2P payment apps involve social components and could be categorized as a social+ payment app, like Venmo. Such products not only enable users to transfer money, but also allow them to build a community around them thanks to social interactions and UGC content. 
• In social+ products, users themselves generate growth by inviting their friends and family to join the community. Moreover, embedding social interaction within an app allows social+ app to own that conversation between people and build a community around its brand. 
• Core features of a social+ payment app must necessarily include those ensuring safety and user-friendliness of payments and transactions and those facilitating interactions between users. 
• The cost of developing a P2P payment app depends on a specific set of features and the developer’s cost per hour rate. Generally, it ranges from about $120,000 to $150,000. 

If you are about to create a P2P payment app, Surf team is ready to share its broad expertise in developing fintech products. Fill in the form and we will return shortly with estimations regarding your project.